Desmond court threat hangs over Sky deal

By Mihir Bose

12:01AM GMT 18 Dec 2003

The Premier League may be breathing a sigh of relief, having saved their £1 billion television deal with Sky as a result of a historic compromise with the European Commission, but The Daily Telegraph understands that they could still face a legal challenge from Dermot Desmond, the owner of Celtic who is also a major shareholder at Manchester United.

Desmond complained about the original deal to the EC, saying it was anti-competitive, and this week's compromise has not altered his argument. He wants clubs to be able to broker their own agreements. He is convinced that, if individual clubs do their own deals, then not only would big clubs like Manchester United earn more, but the total money available from television would be more and, provided a suitable safety net was put in place, then the smaller clubs would also benefit.

His lawyers have now looked at the compromise worked out with the EC and have advised him that he could still take the matter to the court. Whether he takes such a drastic action remains to be seen.

When the chairmen met to discuss the compromise on Tuesday there was some discussion of a legal action, but from the opposite direction - the Premier League refusing to bow to Brussels and testing the matter in the courts. But after Richard Scudamore, the Premier League chief executive, had explained the deal was the best that could be done - and that while it might result in a small reduction in the £1 billion fee agreed by Sky it would avoid costly litigation - the chairmen agreed.

For months, Scudamore has been under intense pressure from some chairmen to try and get the television deal completed. Two years ago, just after ITV Digital collapsed, Sky offered to renew the present contract and the chairmen were very keen. But the EC made it clear that a straight renewal would be immediately vetoed. Scudamore was then advised by his lawyers that in order to get the EC onside, the Premier League must play a patient game.

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However, when a crucial meeting of the Premier League took place on April 19, several clubs made it clear that their bankers needed to know whether the clubs were getting a new deal. These banks funded their overdrafts and were getting restive, which made the clubs twitchy and a deadline of Aug 31 was set for a new deal, regardless of what the EC said. Richard Murray, chairman of Charlton, was particularly worried and his concerns were echoed by Bolton and Leeds.

This made Scudamore agree the deal with Sky before getting formal EC approval. The result was that the EC were always second-guessing Scudamore. When he offered three live packages, and the EC kicked up a storm, he changed it to four. This week's agreement to strip up to eight live matches from Sky was the final concession.

The chairmen recognise this is a big step. Only live televised matches earn significant money - other much-hyped products, such as access on the internet and mobile phones, have failed to take off, as have pay-per-view matches.

From next season, Sky will not be able to claim exclusivity and, while the reduction in the exclusive premium Sky pay may not be much this time - about £30 million - from the 2007 season when the Premier League have agreed that live matches will be sold to at least two broadcasters in a more equal measure, the loss of exclusive premium will be substantial.

Sky will not give up any of the matches from their prime 4.05pm Sunday slot. They will offer six or eight matches from the third pick of live matches, shown at lunchtime on Saturdays.

But what about Sky customers? Before Sky acquired Premier League football, customers did not pay a subscription to watch Sky Sports. The Cricket World Cup of 1992 was free, once the one-off £400 payment had been made to install the dish. Within weeks of getting the Premier League in 1992, Sky started charging £2 a month for their sports channels. This has now risen to a minimum of £38 a month (other packages can cost more), a 19-fold increase in 10 years, all on the back of Sky providing exclusive sports coverage, most notably Premier League football. Sky may demand a refund from the Premier League, but they are unlikely to offer one to subscribers.

There could be more matches on other channels as a result of another concession made by Sky. This is the near-live packages, which from next season will allow a match played on a Saturday to be seen in its entirety a few hours later. Sky have agreed that the home club can now sell the near-live rights for the home match to any terrestrial channel. The BBC might well be interested in buying some and devoting one of their digital channels to it.